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Spain shoots exports to Canada thanks to the free trade agreement (CETA)

September 3, 2019

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The European Union and Canada said goodbye to tariffs for most products two years ago, a decision that has resulted in an increase in imports and exports between the two territories. A good example is Spain, which has shot 44% of its sales to that country since September 2017, date on which the free trade agreement (CETA or Comprehensive Economic and Trade Agreement) entered into force.

Specifically, our country recorded exports to the Canadian market worth 157 million euros in May 2019, compared to 109 million in September 2017. The most benefited sectors are food, beverages, tobacco and automobiles, in contrast to the slight decline in capital goods, metals or chemicals.

If we focus on the annual evolution, the exports of the automobile sector reached 231 million euros in 2018, 315% more than in 2014. The other winning category is food and drinks, with 343 million euros sold in 2018 (+ 66%). Products such as meat, fruits, fish, dairy products or oils enter, among others.

The increase is 82% for consumer products — as textile, footwear, toys or jewelry—, with sales of 160 million euros in 2018. In the case of raw materials, exports rebounded 324% since 2014, but the volume of marketing is still small (28 million last year).

The trade agreement between the EU and Canada was the result of years of arduous negotiations, and was born so much to Open a new market for European companies as to improve its competitiveness in that country thanks to the progressive abolition of tariffs. That without counting on the possibility of participating in public procurement processes in Canada.

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CETA became the largest EU trade agreement to date (2017), but the road was not easy. Its detractors feared that it would degrade the European norms before the difference between both regulations. Something similar happens today with the pact with Mercosur, closed in June after 20 long years of talks. Spanish producers are on alert to the massive beef entrance, pig, chicken or citrus at a much more competitive price, as the farmers denounced in a letter addressed to the President of the Government.

Not to mention the TTIP or Free Trade Agreement between the United States and the EU, more frozen than ever since Trump's arrival to the White House. If the negotiations were already difficult before the president who governs in a tweet, now they are directly non-existent. Quite the contrary: the president has initiated a trade war against China and against so many other countries to which tariffs have risen, such as Spain and its black olives.

Returning to CETA, the Court of Justice of the European Union (CJEU) gave the green light to this trade agreement with a recent ruling in which it determined that the arbitration system between investors and States complies with European standards. It all started with the Wallonia locks, a small French-speaking region of Belgium that was about to derail the pact because of its refusal to stamp its signature.

But the handshake between the EU and Canada was worth it, or so it is reflected in trade flows between the two territories. In the case of Spain, total exports to that market amounted to 1,785 million euros, compared to 1,742 million of imports.